Subprime lending explodes

SALT LAKE CITY—Wayne Thompson has been considering tapping into the subprime lending market for about two years. The idea is in his business plan for Lexington, Ky.-based Residential Mortgage Services, but other changes have taken priority. Still, it made sense that Thompson attended a session at the 2004 National Association of Mortgage Brokers convention here on subprime lending. He didn't learn a lot of about the nuts and bolts of setting up that type of business, but he came away with a newfound appreciation for the increase in subprime lending over the last few years. "It just blew my mind," he said. Subprime mortgage originations totaled $322.9 billion in 2003, an almost eight-fold increase over the $41 billion originated in 1996. Moreover, subprime originations grew in all the years in between, even in 1999 and 2000 when interest rates rose, making that market a potentially lucrative one as interest rates continue their climb now. Stuart Feldstein, president...